TMI Blog2010 (8) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... /- more and above the unaccounted sale admitted by the appellant at ₹ 76,16,558/-. During the course of the search the appellant was found to have carried on parallel business in textile outside the books of the accounts. These was done by encashing the sale proceeds through One day clearing agent who help to encash third party cheques through various bank accounts. For carrying out these operations, the one day clearing agents have floated various partnership firms and proprietary concerns. These Agents were also subjected to search u/s 132 of the Act. It was also stated that these one day clearing agents normally avoid keeping details about the third parties (Like appellant) who encash cheques or DDs through them. 6. During the course of search, certain details were collected regarding the one day clearing transactions. On being confronted with these details at the time of search the appellant owned up the transactions to the extent of ₹ 76,16,558/-. In the returns filed u/s 153A the appellant offered income at 5 % on the above turnover of ₹ 76,16,558/-. 7. The income offered in respect of the one day clearing transactions, by the appellant is tabulated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000-01 30,920 2001-02 1,09,584 2002-03 1,61,574 2003-04 1,10,602 2004-05 2,97,200 2005-06 21,49,561 2006-07 32,21,599 60,81,040 GRAND TOTAL 3,13,29,137 In this regard the plea of the appellant is that the adoption of the figure of suppressed sale of ₹ 3,89,45,695.00 for the purpose of quantifying the profit is not sustainable. The ld. Counsel for the appellant submitted that, in answer to Question No. 5 in the statement recorded on 28.03.2006 vide Page No 27 of the paper book the appellant after scrutinizing the data furnished by the search party had stated, that cheques worth about ₹ 76,16,558/- only to him, and there is no connection between the remaining cheques. The Question No. 5 and Answer to that is as under, Question No. 5 The Sales m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantified the unaccounted sales at ₹ 76,16,558/-, neither the search party nor the Assessing Officer during the assessment proceedings has not recorded any finding from the one day clearing agent, to substantiate their adoption of figure at ₹ 3,13,29,137/- more and above the figures of ₹ 76,16,558/- identified by the appellant. No statement was recorded to that effect from the one day clearing agent V. Ramalingam pointing out that the above said transactions were done by the appellant. 10. ld. counsel relied on decision of THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CHIRANJI LAL STEEL ROLLING MILLS VS COMMISSIONER OF INCOME TAX, PUNJAB. 84 ITR 222, wherein it was held as under : - If the assessee denies the information collected by the Income Tax Officer, it is the duty of the Income-tax Officer to satisfy himself by making independent enquiry from sources considered reliable by him and decide whether the information passed on to him is true or not. If as a result for his own independent enquiry he comes to the conclusion that the information received by him is true, he is at liberty to act there on after disclosing it to the assessee and affording hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 2000-01 ₹ 38,73,880/- for the assessment year 2005-06. 17. The ld. Counsel submitted that when the above discussed adoption of unaccounted sales by the Assessing Officer itself is not sustainable the working made for the unaccounted purchases based onthe above alleged sales is erroneous and not sustainable. He further submitted that even assuming that the above working made by the Assessing Officer applies to the sale figures adopted by the appellant at ₹ 76,16,558/-, there is no justification for addition towards unaccounted purchases inasmuch as the appellant and his group concern engaged in the business of textiles by purchasing goods on credit and also selling the manufacturing goods on credit, which is evident from the financial statements filed with the Department in the regular course before search and referred Pages 145 to 227 and 229 to 278 of the paper book. It is also submitted that in the sworn statement recorded during the course of search from the appellant on 28.03.2006 vide answer to Question No. 3 (Page No. 25 of the paper book) and answer to Question No. 13 (Page No.31 of the paper book), it was stated clearly that the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer has made an addition of ₹ 40,00,000/- invoking the provisions of Sec 69 C of the act in respect of alleged payment of ₹ 20,00,000/- each to Sri. P. Anbalagan and Sri. P. Eswaran. 22. The ld. DR on the other hand, supported the order of the AO and that of the ld. CIT(A). 23. The ld. Counsel further submitted that according to Assessing Officer, in the statement recorded in the course of Survey conducted under 133 A of the act in answer to Question No. 7 Sri. P. Eswaran had confirmed the said fact and invited the attention to the decision rendered by the Madras High Court reported in CIT Vs S.KHADER KHAN SON, 300 ITR 157, wherein it was held that the additions based on survey statement is not maintainable in the absence of any material. 24. The ld. Counsel in support of the above submissions which were made during the course of hearing before us, placed reliance on the following decisions : - MANOJ PRABHAKAR Vs ACIT, 84 TTJ (Del) 625. CIT vs CONCORDE CAPITAL MANAGEMENT CO LTD. 25 DTR (Del) 97. ACIT Vs. JAGUSTE TANDALE CO., 77 TTJ (Pune) 117 Dy. CIT Vs PRAMUKH BUILDERS 115 TTJ 330 (AHD) (TM). 25. He also submitted that the material available o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd force in the submission of the ld. Counsel for the appellant. In the present case no incriminating document or evidence was found during the course of search from the possession of the appellant. Further the addition has been made on the basis of certain abbreviations found in the records of the one day clearing agent based on which the ADIT collected copies of cheques and demand drafts from various bank and matched the abbreviations with that of the names of the appellant group concerns. When the copies of the cheques and demand drafts confronted with the assessee, he identified the transactions relating to him to the tune of ₹ 76,16,558/- as per the table in Para No. 7 of this order and offered income of the same @ 5 % on the very first instance vide answer to Question No. 5 in the statement recorded from him on 28.03.2006 vide page no. 27 of the paper book. Thereafter the ADIT has not investigated further to establish that the remaining transactions belongs to the appellant. Not even a statement was recorded from Shri. V. Ramalingam, the one day clearing agent, to establish that the transactions pertains to the appellant. The Assessing Officer himself has given a findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment the Assessing Officer has not brought in any cogent material to support the addition of ₹ 40,00,000/. We have perused the paper book filed by the ld. Counsel. As pointed out by the ld. Counsel, all the payments to the retiring parties were duly reflected in the respective capital accounts. In this circumstance, we hold that the addition of ₹ 40,00,000/- by the Assessing Officer in respect of payment on retirement to partners is without proper material and valid ground. Therefore, the addition of ₹ 40,00,000/- is deleted. 32. Here also the appellant stated that the entire basis of the assessee is on credit basis as already submitted and as such there is no justification for the addition. 33. The ld.DR supported the order of the Assessing Officer. 34. After hearing both the parties we are of the opinion that as already held that the appellant is doing business on credit, the addition of ₹ 32,760/- is to be deleted. 35. In the result, the appeals in I.T.A.Nos.1258 to 1264/Mds/2009 are allowed. 36. In I.T.A.No. 1257/Mds/2009 in the case of Shri S.Kathirvel, the sole ground raised is regarding addition of ₹ 2,02,600/- representing gif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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